We’re talking about a devolution.
Or, to take another tack, about that well known substance that tends to flow downhill. And I don’t mean water.
The subject is highway money, both the raising it and spending it sides, and which level of government shoulders the burden. In the past, the bulk of money for building and maintaining highways has come from the federal and state levels, courtesy mostly of the gas taxes that each of those levies and collects. Smaller rural roads and local streets, meanwhile, were the responsibility of county and city governments and were paid for primarily with property and sales tax revenue.
But this structure, in place for the past century, is crumbling.
To see why, look at what has happened with Texas motor fuels tax revenue since the last time the Legislature raised the tax rate in 1991. The state tax rate on gasoline that year went from 15 cents a gallon to 20 cents a gallon, where it has since remained.
In fiscal 1992, the first full year with the higher rate, Texas collected $1.953 billion in motor fuels taxes. In fiscal 2012, $3.169 billion came in. That’s an increase of 62.3 percent over 20 years. Texas’ population over that same period went from 17.8 million to 26.1 million residents, a 47 percent increase. So, yay, the gas tax stayed ahead, right?
No, it didn’t. Adjusted for inflation — which really matters, because we’re talking about the cost of building things — gas tax revenue in 1992 dollars has remained basically flat, going from that $1.953 billion to $1.937 billion in 2012.
So, half again more people and no extra money — in real terms — for roads. And it’s gotten even worse since 2000. Population growth, at 24.5 percent, has outpaced gas tax revenue growth, about 18 percent, and that’s not even accounting for inflation.
The same thing has been going on with revenue from the federal gas tax of 18.4 cents a gallon, which hasn’t been raised since 1993. Congress has been propping up the levy’s sagging revenue for the past several years with general fund revenue. Reports out of Washington indicate that subsidy might ebb or end with the next big transportation bill.
The state Legislature and the Texas Department of Transportation compensated for this ugly situation over the past decade by finding multiple ways to finance new roads with debt. But that led to about $30 billion in new state debt. By last spring’s legislative session, lawmakers’ appetite for that strategy has disappeared.
Thus, devolution. Or, in plain terms, pushing more of the transportation funding burden down to the locals. This has taken several forms.
In 2007, the Legislature allowed the creation of local “transportation reinvestment zones.” In such a zone, which a city or county can designate alongside a proposed road or rail project, all or part of the future growth in property taxes would be dedicated to transportation spending. Several have been created since then in the Rio Grande Valley and El Paso. Hays County and the city of San Marcos did so this year, as well. More are on the way.
A couple of sessions ago, the Legislature passed bills allowing Cameron and Hidalgo counties in the Valley to add $10 to the annual car registration fee and use it for local transportation projects. Then in last year’s session, bills to do the same in Webb County (home to Laredo), El Paso County and Bexar County passed.
TxDOT officials in recent weeks pledged to match five years of receipts from that added fee in San Antonio, about $70 million, as part of an $850 million package of highway projects. San Antonio, however, had to agree to take over maintenance of 21 miles of what are currently state highways within the city, pushing future costs from TxDOT to the locals.
Some transportation experts I talked to said that Bexar County bill was especially significant, given that it brought one of the state’s signature urban areas into the mix. They speculate that next session Austin, Dallas-Fort Worth and Houston legislators might carry similar bills, especially given that TxDOT matching money for San Antonio.
On the other hand, that Bexar County legislation, despite being what the Legislature calls a “local bill,” drew 11 “no” votes from the more conservative Republicans in the 31-member Senate. The 20 “yes” votes were still easily enough to pass the bill. But expand that initiative to all of the state’s largest cities and that $10 fee would start to look an awful lot like a statewide levy. The politics could get ticklish.
Meanwhile, the Legislature last session passed another bill allowing the formation of “county energy transportation reinvestment zones,” which would work pretty much like the taxing districts allowed by the 2007 law. The distinction was that the money, for now, could only be spent on county roads, not the state highway system.
But the law stipulated that forming such zones was a necessary step to be eligible for part of $225 million the Legislature set aside to repair county roads damaged by heavy oil and gas trucks. TxDOT then wrote rules setting a Feb. 14 deadline for counties to create such zones and apply for part of the $225 million. The result has been a scramble across the state to form those zones (although TxDOT likely will move the deadline back a month). I was told that more than half of the state’s counties likely will do so.
So, all of a sudden there will be zones all over Texas to redirect local property taxes to roads. A future Legislature could easily expand that from county roads to state highways.
Beyond all that, the toll road push has continued and now has taken the form of so-called “managed lanes.” These are new tolled lanes that would sit alongside existing free lanes on expressways, such as what is about to be built on North MoPac Boulevard (Loop 1). TxDOT and local transportation officials are looking at adding toll lanes on South MoPac as well, along with U.S. 183 North and Interstate 35 throughout Central Texas.
And there are plans in various stages of development for four other tollways here. The revenue from all those tolls, after expenses and debt are paid, becomes a local kitty for future transportation projects.
The Legislature in 2009, after much internal strife, rejected a bill that would have allowed local governments to call elections and perhaps levy added taxes and fees for transportation.
Little by little, it’s happening anyway.